This is a syndicated repost published with the permission of Money Morning. To view original, click here. Opinions herein are not those of the Wall Street Examiner or Lee Adler. Reposting does not imply endorsement. The information presented is for educational or entertainment purposes and is not individual investment advice.
Google Inc. (Nasdaq: GOOG, GOOGL) will report 2014’s first-quarter earnings after the bell today (Wednesday), and analysts are predicting earnings per share (EPS) of $6.39 on revenue of $15.5 billion.
In Google’s Q4 earnings report, the company missed EPS projections by 1.5%. However, GOOG did report a 17% year-over-year revenue increase.
EPS and overall revenue won’t be the only thing shareholders look for in Google’s earnings report…
Google (Nasdaq: GOOG) Earnings: What to Watch For
As is typically the case with Google earnings reports, investors will be closely monitoring the company’s advertising revenue Wednesday.
The first advertising metric that bears watching is revenue generated from mobile search advertisements. According to the research firm Trefis, mobile search comprises approximately 29% of Google’s value. Google has a 90% market share of the mobile search engine market, so as the mobile industry continues to grow, Google’s revenue from mobile search advertisements should grow accordingly.
Shareholders will also be looking for revenue growth from paid clicks. In its Q4 earnings report, GOOG reported a 31% year-over-year increase from revenue generated by paid clicks. That was up from Q3 growth of 26%. In Wednesday’s report, shareholders will want to see continued growth from paid clicks.
Promotional Note from Money Morning: One of the only things that has been consistent about the markets in 2014 is volatility. So we’ve outlined how to find profits in a volatile market – like triple-digit gains in just days – if you start with this strategy…
Another important advertisement program for Google is “enhanced campaigns,” which was started in Q3 of 2013. The program allows users to create advertisements that can be displayed across multiple platforms, and shareholders will expect revenue growth in its second full quarter.
While Google’s advertising figures are always key to the company’s bottom line, this week’s earnings report is even more important given the market’s recent performance…
Earnings Impact on Google (Nasdaq: GOOG) Stock
The Q1 earnings report takes on added meaning as the technology sector finds itself in the middle of a six-week sell-off. The Nasdaq Composite has dropped nearly 7% since reaching a high of 4,371.71 in early March. That was the highest the index has been since the “dot-com” era of the early 2000s.
Google stock enjoyed a short-term run-up following its highly publicized stock split last month, but shares have been hit hard during the recent tech sell-off. GOOG has slipped almost 7% in the last month, while GOOGL shares are down 5%.
If GOOG and GOOGL shares are going to regain momentum from the recent sell-off, a strong earnings report highlighted by advertising revenue growth will be a good first step.
On the other hand, an earnings miss or low revenue figures will send GOOG and GOOGL shares lower. With tech stocks falling, nervous investors may overreact to any information that is slightly off in Google’s Q1 report.
Google’s earnings could also have ripple effects through the whole technology sector.
Google and Yahoo! Inc. (Nasdaq: YHOO) are the first two major tech companies to report Q1 earnings, and strong showings would help assuage the concerns of shareholders who have watched momentum tech stocks take a beating this month. Conversely, earnings misses could send the Nasdaq down even further.
Yesterday, Yahoo reported EPS of $0.38, which beat estimates by $0.01. However, revenue for Yahoo slipped 1% to $1.13 billion.
GOOGL shares opened at $557.70 Tuesday, while GOOG opened at $542.76.
Read the rest of this post at Google (Nasdaq: GOOG) Earnings: The Most Important Figures to Watch, published by Money Morning – Only the News You Can Profit From.